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HMRC targets online sellers over unpaid VAT – February 10, 2019

HMRC is chasing Amazon, eBay and overseas sellers who use online marketplaces for £585m in unpaid VAT. While some demands have been sent to the large internet firms, in some cases officials have sent VAT bills directly to foreign sellers who market goods to UK buyers. Firms with a turnover of more than £85,000 a year have to register with HMRC and pay VAT of 20% on goods sold online, with rules introduced in 2016 giving the taxman the power to bill online marketplaces if sellers evade tax. The Revenue has contacted sellers over £315m in tax owed, with Amazon and eBay contacted over a further £270m. George Turner, at TaxWatch UK, has called for tougher rules, warning that VAT fraud is “devastating to legitimate British businesses”.
The Mail on Sunday

June sees fall in remortgages

The number of remortgages completed fell in June, according to research conducted by LMS. The number of remortgages fell from 53,624 to 53,516 between May and June. Despite this, the average loan amount rose from £168,259 to £174,685 over the same time frame. The data highlights that the most popular remortgage product in June was five-year fixed rate offerings, with 46% of all remortgages falling under this category.

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Bank of England cuts growth forecasts for UK

The Bank of England has cut its forecasts for UK growth over the next two years. It also warned that a no-deal Brexit would hit the economy and trigger a further drop in the value of the pound. The Bank left interest rates unchanged at 0.75% against a backdrop of weaker global growth and ongoing trade tensions between the US and China. It said the UK economy was expected to grow by 1.3% this year, down from a previous projection of 1.5% in May. The Bank also cut its outlook for growth in 2020 to 1.3%, from a previous projection of 1.6%. The forecasts are based on the assumption that the UK leaves the EU with a Brexit deal – however it suggested growth could be much slower in the event of no deal.

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UK mortgage approvals rise

The number of mortgage approvals hit 66,400 in June, up from 65,650 in May, according to the Bank of England’s latest data, above economists’ expectations and the highest number since January. Howard Archer, an economist at the EY Item Club, said the reprieve from a disruptive Brexit in March, together with better consumer purchasing power and strong jobs growth, had helped, although the “overall benefit has been relatively limited”. Annual lending growth to UK consumers slowed to 5.5% in June, from 5.7% in May, the slowest rate since April 2014.

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Eurozone prepares for interest rate cut

The European Central Bank has hinted it could cut interest rates to tackle a slowdown in the eurozone economy. It said a weak manufacturing sector and uncertainty about Brexit and trade threatened to derail growth in the bloc. The ECB, which kept interest rates on hold on Thursday, said it saw rates at present or lower levels until mid-2020. It is also considering other measures to support the eurozone, including resuming quantitative easing.

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Banks set for biggest mortgage lending period since 2007

High street banks agreed more than £50bn of mortgages to homebuyers in the first half of the year, up 10% on the first six months of 2018 and setting up lenders for their biggest year since 2007, according to data from UK Finance. The loans were offered to almost a quarter of a million homebuyers in the first six months, up 6% on the first half of 2018. The number of mortgages approved for house purchase rose to 42,653 in June, on a seasonally-adjusted basis, up from 42,407 in May and close to April’s two-year high of 42,792. UK Finance said gross mortgage lending in June was 4% lower than the same month last year, at £21.9bn, as a result of a dip in remortgaging. The figures also showed that unsecured consumer credit growth was stable at 4.1%, still well below late 2016 levels of 7.1%. Lenders have become more cautious with customers as a result of actions by the central bank that hav e encouraged them to tighten lending standards.

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Global growth forecast cut by IMF

The IMF has cut its growth forecasts for the global economy for this year and next. It predicts growth of 3.2% in 2019, down from its April forecast of 3.3%. Growth next year is set to pick up to 3.5%, although that is below its earlier forecast of 3.6%. The IMF has raised its growth forecast for the UK this year to 1.3% from 1.2%. The revision for the UK reflects what the report calls a stronger-than-expected first three months of the year, boosted by pre-Brexit stockpiling. However, the IMF’s World Economic Outlook analysis has named a no-deal Brexit among the chief threats to the world economy.

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Long-term mortgages jump in popularity

Analysis by estate agent Ludlow Thompson shows that the number of long term mortgages issued jumped last year, with homebuyers taking out 3,483 mortgages with 40-year terms in 2018, compared with 162 in 2017. The figures show that the number of mortgages issued with terms longer than 25-years climbed 10% between 2017 and 2018, from 455,647 to 499,558. Money Expert cites a Moneyfacts report which found that more than half of all residential mortgage products now offer a maximum term of 40 years, with the number increasing from 1,217 in June 2014 to 2,744 in June 2019.

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Banks assess no-deal threat to SMEs

Banks are assessing the risks a no-deal Brexit poses to small businesses, according to accountancy firms which have been advising banks on their preparations for Britain leaving the EU without a deal in place. The Bank of England (BoE) believes the banking sector is well-prepared for the fallout of an exit from the EU with no deal in place, but it has been suggested that a sudden downturn could hit access to credit for small firms. BoE analysis suggests that 80% of businesses believe they are prepared for a no-deal Brexit but around one in 10 have no contingency plan and did not expect to develop one. SMEs were also deemed more likely to have not prepared for a cliff-edge Brexit.

The Daily Telegraph

Demand for mortgages accelerated in second quarter

Demand for mortgages rose significantly in the second quarter of the year in a sign that the housing market is holding firm amid Brexit uncertainty, according to the Bank of England. In its latest credit conditions survey, a balance of 29.3% of lenders said that demand for mortgages had risen in the past year, compared with 1.8% in the first quarter. Economists said that the figures indicated the avoidance of a disruptive Brexit at the end of March may have provided a boost to housing market activity.

The Times

Mortgage terms and LTVs continue to rise

New research from HSBC has found that the length of mortgage term being taken out by first-time buyers and the loan to value chosen have both increased significantly since the beginning of 2018. Since January 2018 the average mortgage length chosen by first-time buyers has increased by three and a half years, and now sits at 27 years 8 months. First-time buyers are now, on average, taking out mortgages for six years longer than those already on the property ladder and the average LTV for first-time purchases has increased from 72% LTV to 81%. The research also found that the average age people expect to get onto the property ladder is now 39 years old and more than half of those looking to buy their first home already have a family to support.

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UK economy returns to growth

The UK economy grew by 0.3% in the three months to the end of May, according to the Office for National Statistics (ONS). Manufacturing rebounded by 1.4% in May compared to a 4.2% drop the previous month. However, the National Institute of Economic and Social Research said it still expected a fall in GDP of 0.1% in the three months to June as Brexit-related uncertainty takes its toll.

The Daily Telegraph The Times City AM The Guardian The Independent

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British Airways faces record fine for data breach

British Airways is facing a record fine of £183m for last year’s breach of its security systems. The airline, owned by IAG, says it is “surprised and disappointed” by the penalty from the Information Commissioner’s Office (ICO). The ICO said the incident took place after users of British Airways’ website were diverted to a fraudulent site. Through this false site, details of about 500,000 customers were harvested by the attackers, the ICO said. The watchdog said a variety of information was “compromised” by poor security arrangements at the company, including log in, payment card, and travel booking details as well name and address information.

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Productivity dips for third consecutive quarter

Productivity fell for the third consecutive quarter in Q1, with the decline January through March matching the biggest fall since the end of 2015. Figures from the Office for National Statistics show that output dipped 0.2% compared to Q1 2018. This compares to the 0.1% slide seen in the final quester of last year. The manufacturing sector saw productivity decline by 0.9%, while in the services sector a 0.2% increase was recorded.

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UK construction output falls to decade low

IHS Markit’s UK Construction Purchasing Managers’ Index (PMI) fell to its lowest level since April 2009 in June, to a reading of 43, on the back of the sharpest drop in UK housebuilding demand for three years. This marks the fourth time the sector has contracted in the past five months. Economists were expecting a figure of 49.2. Any reading above 50 denotes growth, below represents contraction. Tim Moore, associate director at IHS Markit, said the figures revealed “weakness across the board” for the construction sector.

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Firms must report on climate change by 2022

Publicly listed companies and large asset owners will have to report on how climate change risk impacts on their activities by 2022, the City minister John Glen is set to announce. Speaking at a Green Finance Summit in London, Mr Glen will point out that the UK’s financial services sector must be at the heart of the country’s efforts to tackle climate change and meet a goal of net zero carbon emissions by 2050. Banks will be urged to play a bigger role to support the UK meeting its target by investing in sustainability and explaining their own exposure to the climate crisis while financial services firms will also be expected to disclose how climate change risk will hit their activities.

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Rise in borrowers taking out marathon mortgages

The number of borrowers taking out “marathon” mortgages lasting 35 years or more has reached its highest level since the 2011 recession. Figures from the Financial Conduct Authority reveal 28,310 mortgages running for 35 years or more were approved in 2017 – a 27% annual rise. Barclays last week extended the maximum term on its Family Springboard mortgage from 25 to 35 years, a further sign that first-time buyers are being encouraged to take out marathon deals. The FCA said 2.5% of mortgage approvals in 2017 were for marathon deals, compared with 1.6% in 2011.

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Bank freezes rates and cuts growth outlook

The Bank of England has kept interest rates on hold at 0.75% amid heightened no-deal Brexit fears and as UK growth falters. The MPC voted unanimously to keep rates unchanged as it cautioned the “downside risks” to growth had increased since its last set of forecasts in May. The Bank also trimmed its expectations for second quarter growth, predicting GDP will remain flat against a previous forecast for 0.2% expansion, after official data showed the economy dipped by a worse-than-feared 0.4% in April. However, the Bank reiterated that “gradual” rate hikes would be needed over the next three years to keep inflation to its two per cent target.

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Bank of England unconcerned about high LTV lending

The amount of loan-to-value mortgage lending with ratios above 90% is approaching pre-crisis highs, but the Bank of England’s executive director for financial stability has said the regulator isn’t concerned. Speaking at the University of Warwick, Alex Brazier continued to say that, although banks have a real appetite to lend, households don’t have the appetite to borrow. He said credit conditions in the mortgage market are “easy” and mortgage pricing is competitive.

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Asset finance market grows in April

According to figures from the Finance & Leasing Association, asset finance new business grew by 7% in April, compared with the same month last year. The data showed that new business in the plant and machinery finance and business equipment finance sectors rose by 8% and 9% respectively, while commercial vehicles finance new business was up 23% over the same period. Total asset finance for the month of April was £2.94bn (€3.32bn). The total excluding high value deals was £2.82bn, a rise of 10% year-on-year. By channel, direct finance was £1.48bn, a 16% year-on-year rise, while broker introduced finance was £561m, up 10% compared to April 2018. Sales finance came in at £779m, unchanged from last year. Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market has made a great start to the second quarter of 2019, recording its seventh consecutive month of new busines s growth in April.”

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